800 F.2d 1358 (5th Cir. 1986), 85-3341, Matter of Koerner

Docket Nº:85-3341, 85-3727.
Citation:800 F.2d 1358
Party Name:In the Matter of Louis R. KOERNER, Jr., Plaintiff-Appellant. In the Matter of Louis R. KOERNER, Jr., Debtor. Louis R. KOERNER, Jr., Plaintiff-Appellant, v. COLONIAL BANK, Defendant-Appellee.
Case Date:September 24, 1986
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1358

800 F.2d 1358 (5th Cir. 1986)

In the Matter of Louis R. KOERNER, Jr., Plaintiff-Appellant.

In the Matter of Louis R. KOERNER, Jr., Debtor.

Louis R. KOERNER, Jr., Plaintiff-Appellant,

v.

COLONIAL BANK, Defendant-Appellee.

Nos. 85-3341, 85-3727.

United States Court of Appeals, Fifth Circuit

September 24, 1986

Page 1359

Louis R. Koerner, Jr., New Orleans, La., W. Kenneth Klein, Slidell, La., for plaintiff-appellant.

Harold J. Krent, Dept. of Justice, William Kanter, Atty., Appellate Staff, Civil Div., Washington, D.C., for intervenor, U.S.

Kronish, Lieb, Weiner & Hellman, Lawrence J. Kaiser, New York City, for amicus curiae, Bankruptcy Judges.

Morgan J. Frankel, Michael Davidson, Senate Legal Counsel, Washington, D.C., for intervenor, U.S. Senate.

Charles Tiefer, Steven R. Ross, General Counsel to the Clerk, U.S. House of Representatives, Washington, D.C., for House Speaker and Bipartisan Leadership Group of House of Representatives.

Robert A. Mathis, Metairie, La., for Colonial Bank.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before CLARK, Chief Judge, GOLDBERG, and GARWOOD, Circuit Judges.

CLARK, Chief Judge:

Louis Koerner brought two appeals to this court which we consolidated for argument. The first appeal, No. 85-3341, seeks to reverse the district court's interim order rejecting his constitutional challenge to the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L. No. 98-353,

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1984 U.S.Code Cong. & Ad.News (98 Stat.) 333 (the 1984 Act) and remanding the cause to the bankruptcy court. The second appeal, No. 85-3727, contests the district court's final order dismissing Koerner's appeal from the bankruptcy court's order converting the Chapter 11 proceeding to a Chapter 7 involuntary liquidation. We dismiss the appeal in cause No. 85-3341 for lack of jurisdiction. We affirm the district court's order dismissing the appeal in cause No. 85-3727.

I. BACKGROUND

Louis R. Koerner, Jr., filed a voluntary petition for reorganization under Chapter 11 of Title 11, United States Code. The matter was referred to the bankruptcy court under the district's interim rule of reference. 1 The matter was assigned to Bankruptcy Judge Thomas H. Kingsmill, Jr. The bankruptcy court subsequently granted the motion of a creditor, Colonial Bank, to convert the case to an involuntary liquidation proceeding under Chapter 7. Koerner moved the bankruptcy court for reconsideration of the order of conversion or for a new trial. He also requested "a determination of the unconstitutionality of the bankruptcy laws ... [and the] authority [of] Hon. T.H. Kingsmill to exercise the powers of a bankruptcy judge."

Koerner also moved the district court to withdraw the reference to the bankruptcy court so that he might present his constitutional challenge to the 1984 Act to the district court. The district court promptly withdrew its reference of the matter to the bankruptcy court. The district court subsequently rejected Koerner's constitutional challenge and referred the case back to the bankruptcy court for further proceedings. Koerner filed a timely notice of appeal to this court from the district court's order. The Department of Justice, appearing on behalf of the United States Executive Branch, intervened pursuant to 28 U.S.C. Sec. 2403(a) to support Koerner's challenge on appeal. In response, the United States Senate and the House Bipartisan Leadership Group intervened to defend the constitutionality of the 1984 Act. Amici in support of the Act are Bankruptcy Judges Lundin, McFeeley, Paine, Robinson, and Votolato.

Following the order referring the cause, the bankruptcy court denied Koerner's motion to reconsider its order of conversion or, in the alternative, for a new trial. Koerner appealed that order to the district court. The district court dismissed the appeal and Koerner filed his second appeal here from the district court's final order of dismissal.

II. APPELLATE JURISDICTION

  1. Cause No. 85-3341

    The appeal to this court in No. 85-3341 is dismissed for lack of jurisdiction. 28 U.S.C. Sec. 158(d) vests courts of appeals with jurisdiction over all final decisions of district courts rendered on appeals from bankruptcy courts. The order of the district court from which this appeal was taken was an original order of that court. It was not entered on an appeal from the bankruptcy court.

    28 U.S.C. Sec. 1291 provides appellate jurisdiction over final orders which end the litigation on the merits and leave nothing for the court to do but execute the judgment. Thompson v. Betts, 754 F.2d 1243, 1245 (5th Cir.1985) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978)). The rejection of Koerner's constitutional challenge to the 1984 Act was not a final order. It did not end this litigation on the merits. Rather, it returned the matter to the bankruptcy court for further proceedings.

    This order does not fall within the collateral order doctrine. This court may review a nonfinal order of a district court if the order "conclusively determine[s] the disputed question, resolve[s] an important issue completely separate from the merits of the action, and [is] effectively unreviewable

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    on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. at 468, 98 S.Ct. at 2458; Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949). The district court's order affirming the constitutionality of the 1984 Act fails to meet the third requirement because it remains effectively reviewable on appeal from the final judgment in No. 85-3727. This disposition makes our adjudication in No. 85-3341 consistent with that of the Ninth Circuit in In re: Benny, 791 F.2d 712 (9th Cir.1986).

  2. Cause No. 85-3727

    This court has jurisdiction to hear and decide No. 85-3727. The final order of the district court appealed from in No. 85-3727 was rendered on an appeal to it from an order of the bankruptcy court under 28 U.S.C. Sec. 158(a). This court is clearly vested with jurisdiction over the district court order dismissing Koerner's appeal from the bankruptcy court's decision to deny his motion for reconsideration or for a new trial under 28 U.S.C. Sec. 158(d).

    Although we lack jurisdiction to hear the appeal from the district court's order rejecting Koerner's constitutional challenge, the appeal in No. 85-3727 necessarily presents the same issue, both because it implicates the jurisdiction of the bankruptcy court and because the unappealable interim order is now a part of the cause properly appealed to the district court and from that court to this court. Before we can decide the merits of Koerner's case, we must determine whether Judge Kingsmill was authorized to exercise the powers of a bankruptcy judge under the 1984 Act.

    III. STATUTORY BACKGROUND

    A brief review of the three major revisions to United States bankruptcy law and procedure since the first bankruptcy law was enacted in 1898 will assist the reader in understanding the 1984 Act. Under the Bankruptcy Act of 1898, district courts were vested with original jurisdiction over bankruptcy proceedings. This was not changed by the 1934 amendments. 11 U.S.C.A.app. Sec. 11. District court judges were empowered to appoint referees in bankruptcy to serve for six years. Id. Sec. 62. When a referee's term expired, he would "continue to perform the duties of his office until his successor is appointed and qualifies." Id. The Bankruptcy Reform Act of 1978 (the 1978 Act) repealed these provisions. Pub.L. No. 95-598, Sec. 401(a), 1978 U.S.Code Cong. & Ad.News (92 Stat.) 2549.

    Section 201 of the 1978 Act established a "United States Bankruptcy Court" in each judicial district "as an adjunct to the district court for such district." It provided that bankruptcy judges were to be appointed by the President for terms of fourteen years but that a judge could continue to perform the duties of the office "until his successor takes office." Title IV provided a transition period of five years and five months following the date of enactment, Nov. 6, 1978. During this period, each referee in bankruptcy then serving would continue to serve for the remainder of his appointed term unless found not qualified by the Chief Judge of the Circuit in consultation with a merit screening committee. The terms of referees found qualified were to be extended through the end of the transition period, March 31, 1984, and, on expiration of their appointed terms as referees, these successfully screened officials were designated bankruptcy judges.

    The 1978 Act contained two holdover provisions. The first, Sec. 404(b), states that "[t]he term of a referee in bankruptcy who is serving on the date of enactment of this Act is extended to and expires on March 31, 1984 or when his successor takes office." The second holdover provision, Sec. 404(d), incorporated Sec. 34(a) of the prior law which provided: "[u]pon the expiration of his term, a referee in bankruptcy shall continue to perform the duties of his office until his successor is appointed and qualifies...." 11 U.S.C.A.app. Sec. 62(a).

    By a series of Extension Acts, the expiration date of the transition provisions of the 1978 Act was extended four times to April

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    30, 1984, May 25, 1984, June 20, 1984, and June 27, 1984. Then, finally, it was extended to "the day before the date of enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984" by the 1984 Act. Sec. 121(b). The four short-term acts extending the duration of the transition period, Pub.L. No. 98-249, 98 Stat. 116 (Mar. 31, 1984); Pub.L. No. 98-271, 98 Stat. 163 (Apr. 30, 1984); Pub.L. No. 98-299, 98...

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